Digital Finance and Innovations in Financing for Education
Education can be a powerful factor in breaking the cycle of poverty and providing a brighter future for children. Sending children to school helps the next generation attain the skills needed for a healthy and productive life. Yet poor families around the world struggle with the financial burden of educating their children. The result is a large number of school-age children who are not in school today, and who are on track to join the already large adult population with little formal education on marketable skills.
The Sustainable Development Goals aim to “ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.” To fulfill this goal will require, among other things, action to reduce the financial burden faced by households in sending their children to school.
Can innovations in digital finance play a role? Mobile money has already had a profound impact on the lives of low-income people. In many countries, mobile money has made it easier to move money between family members, to pay bills, to make use of basic savings and credit products, and even to access affordable solar energy services.
In the education sector, mobile payments and digital finance are transforming the way people pay for and secure access to their children’s education. For example, mobile money is making it easier for caretakers to pay school fees and to access and pay for digital learning courses; it helps schools better manage their finances, getting tuition payments on time, keeping records updated, and paying teacher salaries; and it helps governments keep the education system running by effectively paying teacher salaries nationwide. In addition, financial service providers are beginning to offer a range of digital savings and loan products that help families manage the cost of education. Combined, these innovations may play an important role in keeping more children in school and delivering on the Sustainable Development Goal for education.